How to Handle Frivolous Lawsuits Alleging Song Copyright Infringement

Given these procedural roadblocks to an early dismissal of even the most patently bogus claim, a defendant faced with such a lawsuit must weigh the advantages and disadvantages of proceeding with the case. Foremost among the disadvantages of going forward is cost. Pretrial discovery, motion practice, possible travel, and legal expenses and disbursements can rapidly run up a formidable series of bills. Often the plaintiff's lawyers in such cases will be retained on a contingency basis, thereby limiting the legal fee exposure for the claimant. The same economic safeguard will ordinarily not apply to the defendant.

There are also the less quantifiable, but equally important, considerations of time and aggravation. Moreover, as has been demonstrated all too often, there exists the possibility of an unanticipated, and unwelcome, outcome. The defendant could lose, despite the clear strength of the merits of the defense. Juries sometimes do inexplicable things. Perhaps there is a hometown aspect to the case favoring the plaintiff, or some doubt that might be raised as a result of conflicting expert witness testimony. Too, there is always the stigma that attaches when one is accused of, in effect, being a thief. For whatever reasons, the spectre of ultimate uncertainty looms.

All of these factors can mitigate against moving ahead with the case, even in the face of the most outrageous, transparently false allegations. This, in turn, may lead to serious consideration of settlement. While the notion of settling (ie, paying money to a prevaricating plaintiff) is understandably obnoxious to a wrongly accused songwriter, it may ultimately be determined that under such circumstances discretion is the better part of valor. When that decision is reached, it is critical to take into account a number of key provisions that should be reflected in any settlement document. Having gone through the painful process of agreeing to pay out money which is neither legally justified nor morally appropriate, it becomes perhaps even more critical to ensure that the terms of any settlement protect the already victimized songwriter against further exposure.

Following are essential elements of any copyright infringement settlement agreement:

Confidentiality. A principal reason for settling such a claim is to avoid the unpleasant publicity of a lawsuit and the attendant potential injury to the defendant's good name and reputation. Accordingly, a strongly protective provision of confidentiality as to the fact of the settlement itself (which, to many, seems to suggest some aspect of admission of wrongdoing), as well as to the terms thereof, must be incorporated into the settlement document. Similarly, public discussions of any details of the underlying claim must also be strictly prohibited. As with all such provisions, it is often difficult to prove breach. Moreover, it is equally difficult in many instances to prove and quantify damages. While these problems are inherent to virtually all confidentiality clauses, some teeth to the provision can be provided by holding back a portion of the settlement payment or, if the plaintiff is sufficiently solvent, by providing for liquidated damages in the event of a breach. (Although in the latter scenario, care must be taken that the designated sum does not constitute a 'penalty.')

Assignment of Copyright. Any and all rights, including all worldwide copyrights in perpetuity, in and to the plaintiff's song must be assigned to the defendant. This will both avoid any future disputes over the two subject compositions and also ensure that the defendant can exploit his or her own song without fear of infringing on the plaintiff's work. As part of the assignment it should be specified, although as a legal matter it would follow in any case, that the plaintiff will not make use of, or attempt or authorize or permit others to make use of, the plaintiff's composition at any time.

Disclosure of All Agreements and Accountings. It will be important for the defendant to know what agreements the plaintiff may have entered into with respect to the allegedly infringed song, including all affiliation agreements (eg, Harry Fox Agency, performing rights societies, etc.), all synchronization, mechanical and other licenses and, of course, any publishing agreements that might include the plaintiff's song. Concomitant with such disclosure, there should be a full accounting of any sums received by or owed to the plaintiff (assuming the song has been exploited) together with letters of direction that all future payments be sent to the defendant.

Choice of Law and Venue. The parties are not bound to apply the law of, or to commit to the courts of, the same jurisdiction in which the claim was brought. Because the plaintiff presumably selected a venue favorable to his or her scheme, it may be advisable to provide that any disputes arising under the settlement agreement be subject to the laws and adjudicated in the courts of a different jurisdiction, such as that of the defendant. In addition, certain states have more experience with issues concerning intellectual property; some jurisdictions traditionally may be less sympathetic with parties who breach settlement agreements.

Songwriter Insurance

Although it is not possible to protect against the bringing of frivolous lawsuits, there are steps that can be taken to limit a potential defendant-songwriter's exposure and even to mitigate potential damages. In fact, there is a growing market in songwriter insurance. Certain companies will underwrite for claims of copyright infringement, akin to more traditional errors and omissions coverage, but not limited to any particular production. Depending upon the songwriter's claims history, the size and nature of the catalogue being insured, and the amount of the deductible and policy limits, annual premiums can run from several hundred dollars to several hundred thousand dollars. Insurance companies that offer such insurance companies include: Fireman's Fund Insurance Co. (800-227-1700); St. Paul Co. (800-328-2189); AON Insurance Co. (312-281-1000) and Chubb Group of Insurance Cos. (212-612-4000).

Songwriter insurance might also minimize reliance on settlements because there is less economic pressure on an insured defendant to settle. This, in turn, could help discourage those claimants who anticipate rapid settlements based on nuisance payments or cost-of-defense calculations.

Where patently baseless claims are asserted, neither the publisher nor the songwriter has done anything wrong. Yet the vast majority of songwriter-publisher contracts lay 100% of the legal liability and financial responsibility in such circumstances at the songwriter's doorstep. But it is not at all inappropriate to ask the publisher with whom a particular songwriter may be affiliated to pay for all or a portion of songwriter insurance premiums.

Another deterrent against such suits is the stronger enforcement of sanctions against attorneys who collaborate in the bringing of frivolous actions and a more liberal attitude toward the awarding of attorney fees in such circumstances. For example, both Rule 11 of the Federal Rules of Civil Procedure and Rule 130-1 of the New York State Rules of the Chief Administrator, as well as the recently enacted NY CPLR 8303-2 (and similar court rules in other states) provide for costs, attorney fees and sanctions against parties for frivolous or otherwise improper pleadings or conduct. Similarly, with respect to copyright actions, Sec. 505 of the Copyright Act allows for an award of attorney fees to the 'prevailing party' – which can be a defendant – in the discretion of the court.

However, the promise of such provisions isn't always realized. There are two principal reasons for this. First, many plaintiffs in hit-and-run cases are without funds to make good on any meaningful fee award or sanctions that might be levied. Indeed, a great many actions of this type are brought by plaintiffs with limited funds, seeking to target a deep pocket and walk away with something extra once costs and fees are paid. Second, both state and federal courts have traditionally acted with caution in invoking these rules.

Until such time as either the legal guidelines for summary dismissal allow more leeway to permit the weeding out of patently frivolous copyright infringement claims, or until unscrupulous plaintiffs are deterred from bringing baseless infringement suits, the attorney for the settling defendant must focus on incorporating into the settlement document as many protections as the circumstances of the claim permit.

Howard Siegel is a partner at Pryor Cashman Sherman & Flynn in New York City. He is also editor-in-chief of the book 'Entertainment Law' (published by the New York State Bar Association), an adjunct professor at Fordham Law School and a frequent speaker and author on topics relating to music practice.

No group of creative contributors to the entertainment business is more susceptible to frivolous lawsuits than songwriters. They are easy targets because of the burdens attendant to defending against claims of copyright infringement; and they are inviting targets because of the perception (not always justified) that there are 'deep pockets' associated with a successful song and by being a successful songwriter.

The methodology employed by an unscrupulous plaintiff ' sometimes aided and abetted by an equally unscrupulous counsel ' may vary, but the prototypical scenario is fairly predictable. A claim is asserted, generally for very substantial damages, alleging that the defendant songwriter infringed a pre-existing song authored by the plaintiff. In the majority of frivolous suits, the plaintiff's song has never been commercially released or otherwise exploited, but claims are made that the plaintiff's song was written prior to the defendant's composition, that it was sent to various publishers and record companies and that the defendant must have heard the song at the offices of one or more of those recipients. Indeed, the script will almost always include the publisher and any labels with which the defendant is known to have some historical or ongoing relationship.

Assuming that all of these elements are wholly fabricated, the obvious question is, why not simply move to dismiss the claim? Unfortunately ' and here is where an often arduous and unjust legal journey begins ' such cases are generally not subject to summary dismissal. It is hornbook law that questions of fact must be left to the triers of fact; therefore, motions to dismiss can only be granted where the case can be resolved solely on issues of law. A typical claim of copyright infringement is almost entirely factually predicted: Are the two songs substantially similar; when was each song written; was there access by the defendant songwriter to the plaintiff's composition? Indeed, an emerging trend in the Second and Ninth federal circuits strongly suggests that where a mere allegation is made that the two songs are 'strikingly similar' (a cut above the traditional yardstick of 'substantial' similarity), the case cannot be dismissed. The expert witnesses must, under these circumstances, be afforded the opportunity to debate the issue. This concept also elevates the importance of the respective times of creation of the two songs, yet another critical, and purely factual, issue.

Given these procedural roadblocks to an early dismissal of even the most patently bogus claim, a defendant faced with such a lawsuit must weigh the advantages and disadvantages of proceeding with the case. Foremost among the disadvantages of going forward is cost. Pretrial discovery, motion practice, possible travel, and legal expenses and disbursements can rapidly run up a formidable series of bills. Often the plaintiff's lawyers in such cases will be retained on a contingency basis, thereby limiting the legal fee exposure for the claimant. The same economic safeguard will ordinarily not apply to the defendant.

There are also the less quantifiable, but equally important, considerations of time and aggravation. Moreover, as has been demonstrated all too often, there exists the possibility of an unanticipated, and unwelcome, outcome. The defendant could lose, despite the clear strength of the merits of the defense. Juries sometimes do inexplicable things. Perhaps there is a hometown aspect to the case favoring the plaintiff, or some doubt that might be raised as a result of conflicting expert witness testimony. Too, there is always the stigma that attaches when one is accused of, in effect, being a thief. For whatever reasons, the spectre of ultimate uncertainty looms.

All of these factors can mitigate against moving ahead with the case, even in the face of the most outrageous, transparently false allegations. This, in turn, may lead to serious consideration of settlement. While the notion of settling (ie, paying money to a prevaricating plaintiff) is understandably obnoxious to a wrongly accused songwriter, it may ultimately be determined that under such circumstances discretion is the better part of valor. When that decision is reached, it is critical to take into account a number of key provisions that should be reflected in any settlement document. Having gone through the painful process of agreeing to pay out money which is neither legally justified nor morally appropriate, it becomes perhaps even more critical to ensure that the terms of any settlement protect the already victimized songwriter against further exposure.

Following are essential elements of any copyright infringement settlement agreement:

Confidentiality. A principal reason for settling such a claim is to avoid the unpleasant publicity of a lawsuit and the attendant potential injury to the defendant's good name and reputation. Accordingly, a strongly protective provision of confidentiality as to the fact of the settlement itself (which, to many, seems to suggest some aspect of admission of wrongdoing), as well as to the terms thereof, must be incorporated into the settlement document. Similarly, public discussions of any details of the underlying claim must also be strictly prohibited. As with all such provisions, it is often difficult to prove breach. Moreover, it is equally difficult in many instances to prove and quantify damages. While these problems are inherent to virtually all confidentiality clauses, some teeth to the provision can be provided by holding back a portion of the settlement payment or, if the plaintiff is sufficiently solvent, by providing for liquidated damages in the event of a breach. (Although in the latter scenario, care must be taken that the designated sum does not constitute a 'penalty.')

Assignment of Copyright. Any and all rights, including all worldwide copyrights in perpetuity, in and to the plaintiff's song must be assigned to the defendant. This will both avoid any future disputes over the two subject compositions and also ensure that the defendant can exploit his or her own song without fear of infringing on the plaintiff's work. As part of the assignment it should be specified, although as a legal matter it would follow in any case, that the plaintiff will not make use of, or attempt or authorize or permit others to make use of, the plaintiff's composition at any time.

Disclosure of All Agreements and Accountings. It will be important for the defendant to know what agreements the plaintiff may have entered into with respect to the allegedly infringed song, including all affiliation agreements (eg, Harry Fox Agency, performing rights societies, etc.), all synchronization, mechanical and other licenses and, of course, any publishing agreements that might include the plaintiff's song. Concomitant with such disclosure, there should be a full accounting of any sums received by or owed to the plaintiff (assuming the song has been exploited) together with letters of direction that all future payments be sent to the defendant.

Choice of Law and Venue. The parties are not bound to apply the law of, or to commit to the courts of, the same jurisdiction in which the claim was brought. Because the plaintiff presumably selected a venue favorable to his or her scheme, it may be advisable to provide that any disputes arising under the settlement agreement be subject to the laws and adjudicated in the courts of a different jurisdiction, such as that of the defendant. In addition, certain states have more experience with issues concerning intellectual property; some jurisdictions traditionally may be less sympathetic with parties who breach settlement agreements.

Songwriter Insurance

Although it is not possible to protect against the bringing of frivolous lawsuits, there are steps that can be taken to limit a potential defendant-songwriter's exposure and even to mitigate potential damages. In fact, there is a growing market in songwriter insurance. Certain companies will underwrite for claims of copyright infringement, akin to more traditional errors and omissions coverage, but not limited to any particular production. Depending upon the songwriter's claims history, the size and nature of the catalogue being insured, and the amount of the deductible and policy limits, annual premiums can run from several hundred dollars to several hundred thousand dollars. Insurance companies that offer such insurance companies include: Fireman's Fund Insurance Co. (800-227-1700); St. Paul Co. (800-328-2189); AON Insurance Co. (312-281-1000) and Chubb Group of Insurance Cos. (212-612-4000).

Songwriter insurance might also minimize reliance on settlements because there is less economic pressure on an insured defendant to settle. This, in turn, could help discourage those claimants who anticipate rapid settlements based on nuisance payments or cost-of-defense calculations.

Where patently baseless claims are asserted, neither the publisher nor the songwriter has done anything wrong. Yet the vast majority of songwriter-publisher contracts lay 100% of the legal liability and financial responsibility in such circumstances at the songwriter's doorstep. But it is not at all inappropriate to ask the publisher with whom a particular songwriter may be affiliated to pay for all or a portion of songwriter insurance premiums.

Another deterrent against such suits is the stronger enforcement of sanctions against attorneys who collaborate in the bringing of frivolous actions and a more liberal attitude toward the awarding of attorney fees in such circumstances. For example, both Rule 11 of the Federal Rules of Civil Procedure and Rule 130-1 of the New York State Rules of the Chief Administrator, as well as the recently enacted NY CPLR 8303-2 (and similar court rules in other states) provide for costs, attorney fees and sanctions against parties for frivolous or otherwise improper pleadings or conduct. Similarly, with respect to copyright actions, Sec. 505 of the Copyright Act allows for an award of attorney fees to the 'prevailing party' – which can be a defendant – in the discretion of the court.

However, the promise of such provisions isn't always realized. There are two principal reasons for this. First, many plaintiffs in hit-and-run cases are without funds to make good on any meaningful fee award or sanctions that might be levied. Indeed, a great many actions of this type are brought by plaintiffs with limited funds, seeking to target a deep pocket and walk away with something extra once costs and fees are paid. Second, both state and federal courts have traditionally acted with caution in invoking these rules.

Until such time as either the legal guidelines for summary dismissal allow more leeway to permit the weeding out of patently frivolous copyright infringement claims, or until unscrupulous plaintiffs are deterred from bringing baseless infringement suits, the attorney for the settling defendant must focus on incorporating into the settlement document as many protections as the circumstances of the claim permit.

Howard Siegel is a partner at Pryor Cashman Sherman & Flynn in New York City. He is also editor-in-chief of the book 'Entertainment Law' (published by the New York State Bar Association), an adjunct professor at Fordham Law School and a frequent speaker and author on topics relating to music practice.